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Could the government tighten the belt on JobKeeper ahead of time?
The government is being encouraged to tighten the belt on economic stimulus programs such as JobKeeper on the back of better-than-expected economic recovery.
Could the government tighten the belt on JobKeeper ahead of time?
The government is being encouraged to tighten the belt on economic stimulus programs such as JobKeeper on the back of better-than-expected economic recovery.
Economists are urging the government to consider the introduction of further means tests for JobKeeper to reduce pressure on the public purse and allow economic conditions to normalise.
According to CreditorWatch, a move like this would be warranted given the better-than-expected trade payments and strong economic growth.
The latest CreditorWatch Business Risk Review shows that debtors took, on average, 33 days to pay their bills in November, versus 16 days in November 2019.
The number of days businesses took to pay their bills peaked for the year in June at 47.
“The recovery in payments data is a clear indication that the economy is on the way back, supported by better-than-expected GDP numbers for the September quarter, with economic growth sitting at 3.3 per cent,” said CreditorWatch CEO Patrick Coghlan.
“As a result, there’s potential for the federal government to consider introducing further means tests for economic stimulus programs such as JobKeeper to reduce pressure on the public purse and allow economic conditions to normalise.”
The government recently reported that 2 million employees have dropped off the wage subsidy, meaning that just over 1.5 million employees/eligible business participants remain on the payment.
The lower-than-expected take-up of the second phase of the wage subsidy has been put down to economic recovery and the success of its JobKeeper scheme.
But besides JobKeeper, CreditorWatch wants to see the government go a step further.
Mr Coghlan explained that the temporary moratorium on trading while insolvent should cease on 31 December as planned.
“Extending this provision risks causing damage to the economy as solvent firms could be extending credit to insolvent firms, potentially creating a domino effect down the track if insolvent firms are allowed to continue to operate,” Mr Coghlan added.
Since April 2020, over 3,000 Australian companies have avoided going into external administration, compared with 2019.
Across the board, CreditorWatch has predicted that payment times will improve through the holiday period, as businesses are supported by ongoing government stimulus. Hospitality and tourism businesses will be particular beneficiaries as Australians are forced to spend their time holidaying at home this year, which should see healthier results from these sectors in January.
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